I just attended our company consultant yearly seminar. Every year, we have multiple speakers and our company top performer is on the list this year. Let's call him Joe.
One of the trick that Joe shared is value billing.
Eg: A client approaches him with a problem and a report can be developed to provide information to the client. Joe will sit down and ask himself the question. "If I were the client, how much is this report worth to me? How much value will it add to my business?"
If it is worth 10 hours, he bills 10 hours.
I agree with his concept. If you go to a specialist, you pay for the price because you are paying for the expertise.
It gets more interesting here.
A client approaches him with a problem and he thinks a program needs to be developed. He thinks it is worth 30 hours. He goes to our company programmer John and ask how much it will take to develop the program.
John : "This program will take 15 hours"
Joe : "Can you do it with 12?"
As you can see, Joe is negotiating for lower cost. Hang on, isn't it worth 30 hours? That's right, if John agree to 12, then Joe will be earning 18 hours.
From Joe's point of view, it is all business. He is making money with value billing, he makes use of the resources available to him, negotiate for lower cost and earn the margin.
Anything wrong with that? I think it is the perception. The first thing that come to my mind is:
"What a ripped off"
"We can't trust this guy"
"He is not a team player, he is the crocodile"
Having a second thought, it is all business with this guy.
We have always been told, it is hard to close a deal, because it is a competitive market and the client is not willing to pay. So, whenever we are asked to lower our quote, the perception is, we need to lower it to win the deal.
So, the trick is, when you are dealing with Joe, you need to think like he is. You are a specialist and you are going to negotiate based on what you think the product is worth.
I am not sure whether it is going to work if every consultants in the company is practising the same, because you will be second guessing whether he is hiding the hours from you. After all, everyone wants to meet his target and earn his commission. If you take it personally, there will be less trust between colleagues.
It is all business and therefore, Joe is sharing his trick honestly and openly. He is not the real crocodile, he is just running his own business.
It is an interesting topic to look at, isn't it?
